Church Fund Accounting Question

Thanks for the detailed explanation of your situation. The ideal approach is to create brand new Balance Sheet accounts (typically under Liabilities or Equity, depending on your church's specific reporting preferences) for the designated, restricted, or holding funds. You can then use journal entries to move the current balances out of the P&L and into these new accounts as of a specific start date (like the beginning of the fiscal year).   

While the Reclassify Transactions tool is great for moving transactions between accounts, it cannot change an account type from Profit and Loss to Balance Sheet, making it unsuitable for this specific fix.  

Additionally, while QuickBooks technically allows you to edit an existing account to change it from an Income/Expense type to a Liability type, doing so will alter your historical financial reports. This would distort your past years' P&L statements, which we want to avoid.

By creating fresh accounts and using journal entries, you preserve your financial history while giving yourself a clean slate moving forward. Because church fund accounting involves specific legal and tax tracking nuances, I highly recommend having a certified accounting professional review your new account structure before finalizing these changes.

Feel free to add a reply below if you have other concerns.